(Bloomberg) -- Jamie Dimon, David Solomon and scores of other New York business leaders warned Governor Andrew Cuomo that proposed tax hikes would risk the state’s economic recovery and worsen the exodus of residents to lower-tax locations.
The chief executive officers of JPMorgan Chase & Co. and Goldman Sachs Group Inc. added their names to a list of roughly 250 others who argued in a letter sent Tuesday that higher taxes aren’t needed, given federal stimulus programs approved by Congress and higher-than-expected tax receipts in 2020.
The CEOs said they were compelled “to express alarm at plans to enact the largest spending and tax increases in the state’s history,” adding that the proposals “will jeopardize New York’s recovery from the economic crisis inflicted by Covid-19.”
Cuomo has long-resisted taxes on the wealthy, favored by the growing progressive wing of his party, but the three-term governor has recently become more amenable to them. Multiple scandals, including claims of sexual harassment and accusations his administration covered up Covid-19 nursing-home deaths, have prompted calls by dozens of lawmakers for him to resign, saying his ability to govern is in question. Cuomo has denied the claims and said he won’t step down.
In his proposed $193 billion budget released in January, he suggested an income-tax hike on higher earners that could be forgiven, in part, if they remain in the stat. He said the surcharge, levied on people reporting more than $5 million of income, could raise $1.5 billion. That idea fell short of the proposals advocated by the state’s more progressive legislators.
The federal government said it would direct more than $12 billion in direct aid as part of Congress’s recent coronavirus pandemic-aid package.
On Monday, the state’s budget chief, Robert Mujica, told reporters that the influx of federal funds, combined with higher-than-expected tax receipts, abated the immediate need for cuts to cover a previously anticipated $15 billion shortfall. Mujica stopped short of commenting on taxes on the wealthy, which Cuomo has said were still “on the table.”Now the governor must negotiate with lawmakers in the state Senate and Assembly, where the governor faces an impeachment inquiry over the allegations of misconduct.
“The threat of a weakened governor from the left is making it hard for him to stop the increases,” Kathy Wylde, CEO of the Partnership for New York City, said in an interview earlier this month. “Advocates have capitalized on the pronounced inequities exposed by the pandemic to advance the case for redistribution of wealth as all the reason they need to raise taxes.”
The Assembly’s proposed $208.3 billion spending plan includes a tax on top earners and a new levy on capital gains for taxpayers earning more than $1 million a year.In a call with reporters on Tuesday, Senate Majority Leader Andrea Stewart-Cousins said she valued the input from the business community expressed in the letter but said they would now “have to do a little more, so that we’re not looking at the same inequities year after year.”
She said the added funds from federal stimulus aid and higher-than-expected tax receipts were just a short-term fix and weren’t enough to address the more structural issues around the state related to health care, education and social services.
“We’re looking at equity,” she said. “It takes care of what happened to us during Covid. It does not account for the deficit that we had before.”
The business executives said in their letter that there might at some point be a need to raise new revenue for education, health and welfare programs.
“At this moment, however, significant corporate and individual tax increases will make it far more difficult to restart the economic engine and reassemble the deep and diverse talent pool that makes New York the greatest city in the world,” they wrote.
Peter Grauer, chairman of Bloomberg LP, the parent company of Bloomberg News, also signed the letter. Others who participated include Citigroup Inc. CEO Jane Fraser, Morgan Stanley CEO James Gorman and Vornado Realty Trust CEO Steven Roth.
The group also pointed to an exodus of workers from New York City and the struggle to keep employees in offices.
“Our businesses are committed to maintaining a strong presence in New York, but currently only about 10% of our colleagues are in the office and prospects for the future of a dense urban workplace are uncertain,” they wrote. “Many members of our workforce have resettled their families in other locations, generally with far lower taxes than New York, and the proposed tax increases will make it harder to get them to return.”
The Wall Street Journal reported the letter earlier Tuesday.
(Updates with comments from Andrea Stewart-Cousins in 10th paragraph)
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